LONDON (Thomson Reuters Foundation) - The health system in the Libyan city of Sirte has collapsed and thousands of residents are facing shortages of food and medicine as pro-government forces battle to seize control of the coastal city from Islamic State, a medical charity said on Tuesday.

Over the past two days, forces led by brigades from Misrata have pressed further into Sirte's neighborhood Number Three, advancing building by building as they try to finish a five-month-old campaign.

Islamic State now controls a residential strip of less than 1 km long in their former stronghold.

The International Medical Corps, which has been assisting Libyans who have fled Sirte, said once Islamic State was ousted from the city, government and aid agencies would face a huge challenge rebuilding infrastructure and re-establishing services.

"Sirte is a collapsed city," said Claudio Colantoni, the International Medical Corps' country director for Libya.

"The situation is dramatic. The health system is completely collapsed, there are no working hospitals, the needs are at 360 degrees," he told the Thomson Reuters Foundation in an phone interview.

Problems were magnified by political divisions within the country, Colantoni added.

"It will be very difficult to cope with this kind of challenge if Libya doesn't find a way to find a political appeasement," he said.

The U.N.-backed Government of National Accord (GNA) has so far struggled to exert its authority and recently saw a rival eastern commander, Kahlifa Haftar, seize some of Libya's major oil ports, one of which is less than 200 km from Sirte.

An estimated 90,000 people, about three quarters of the city's population, have fled Sirte since it was taken over by Islamic State last year, according to the United Nations.

Military operations to oust the jihadist group triggered new displacement, while also leading to the return of many families to areas cleared of militants, the U.N. relief agency said in September.

Those who have fled the area have reported severe shortages of food and medicines as well as lootings, public beheadings, "crucifixions" on scaffolding and abductions, the U.N. Office for the Coordination of Humanitarian Affairs (OCHA) said.

Colantoni said fighting resulted in large numbers of people requiring treatment for wounds as well as psychosocial support.

He said the area around Sirte remained too volatile for the International Medical Corps to deliver aid or open a field hospital.

"For any form of intervention to be carried out the situation needs to be stabilized," Colantoni said.